$100 MILLION OF DEBT AFFECTED. RATING BASED ON LETTER OF CREDIT PROVIDED BY MORGAN STANLEY BANK, NATIONAL ASSOCIATION.
Expected Sale Date
NEW YORK, Jun 14, 2011 -- Moody's Investors Service has assigned a rating of A1/VMIG 1 to the North Texas
Tollway Authority System First Tier Variable Rate Revenue Refunding Bonds,
Series 2011A (the "Bonds"). The proceeds are to be used to refund Series 2008J
Upon the issuance of the letter of credit the rating will be based upon: (i) the
direct-pay letter of credit provided by Morgan Stanley Bank, N.A. (the "Bank");
(ii) the structure and legal protections of the transaction, which ensure timely
payment of debt service and purchase price to bondholders; and (iii) Moody's
evaluation of the credit quality of the Bank issuing the letter of credit.
Moody's currently rates Morgan Stanley Bank, N.A.'s long-term and short-term
other senior obligations ("OSO") A1 and Prime-1, respectively.
DETAILED CREDIT DISCUSSION
Interest Rate Modes and Payment
The Bonds will initially bear interest in a weekly rate mode with interest to be
paid on the first business day of each month. The resolution permits conversion
of the Bonds, in whole or in part, to a daily, flexible, monthly, index
floating, quarterly, semiannual, multiannual, or fixed rate mode.
Moody's ratings only apply, however, to Bonds bearing interest in the weekly and
daily interest rate modes. The daily interest rate mode also pays interest on
the first business day of each month.
The resolution does not permit the issuance of additional bonds.
Flow of Funds
The trustee is instructed to draw under the letter of credit by 4:00 p.m. on the
business day prior to the payment date in order to receive funds sufficient by
1:00 p.m. on the payment date to pay the principal, and interest accrued
thereon, when the same becomes due. The trustee is also instructed to draw
under the letter of credit in accordance with its terms to receive in
immediately available funds by 2:45 p.m. on each purchase date the purchase
price to the extent remarketing proceeds are insufficient. Bonds which are
purchased by the Bank due to a failed remarketing are held by the trustee and
will not be released until the trustee has received confirmation from the Bank
stating that the letter of credit has been reinstated in the amount of the
purchase price drawn for such Bonds. (All times refer to local time in effect in
New York, New York).
Direct Pay Letter Of Credit
The letter of credit provided by the Bank is sized for the full principal amount
plus fifty-one days of interest at a rate of 8%, the maximum rate on the Bonds.
The letter of credit provides sufficient coverage for the Bonds while they bear
interest in the weekly and daily interest rate modes only. The letter of credit
is governed by and construed in accordance with the International Standby
Practices 1998, International Chamber of Commerce Publication No. 590 (ISP98).
Draws On the Letter Of Credit
Conforming draws for principal or interest received by the Bank at or before
4:00 p.m. on a business day will be honored by 1:00 p.m. on the next business
day. Conforming draws for purchase price received by the Bank at or before
12:15 p.m. on a business day will be honored by 2:45 p.m. on the same business
day. (All times refer to local time in effect in New York, New York).
Reinstatement of Interest Draws
Draws made under the letter of credit for interest shall be
automatically reinstated on the opening of business on the fifth calendar day
from the date of such drawing unless the trustee receives notice from the
Bank by 5:00 p.m. on the fourth calendar day that the letter of credit will not
be reinstated. If the trustee receives from the Bank notice of non-reinstatement
of the interest portion of the letter of credit, the Bonds are subject to
mandatory tender. The trustee shall cause such mandatory tender on the second
business day prior to the termination date of the letter of credit. (All
times refer to local time in effect in New York, New York).
Reimbursement Agreement Defaults
In the event of a default under the reimbursement agreement, the Bank may, at
its option, deliver written notice to the trustee stating that such event of
default under the reimbursement agreement has occurred and direct the trustee to
cause a mandatory tender of the Bonds. With direction to cause a mandatory
tender, the Bonds shall be subject to mandatory tender on the second business
day prior to the termination date of the letter of credit. The letter of credit
will terminate fifteen days following the trustee's receipt of notice from
the Bank specifying the occurrence of an event of default under the
reimbursement agreement directing the trustee to cause a mandatory tender of the
Expiration / Termination of the Letter Of Credit
The letter of credit expires on the earliest to occur of: (i) the stated
expiration date of the letter of credit, June 30, 2014; (ii) the earlier of (a)
the date which is fifteen days following the date on which all of the Bonds have
been converted to bear interest at a rate other than the daily or weekly rate,
or (b) the date on which the Bank honors a draw on the letter of credit on or
after such conversion ; (iii) the date the Bank receives notice from the trustee
stating that (a) no Bonds remain outstanding, (b) all required draws on the
letter of credit have been made and honored, or (c) an alternate letter of
credit has been issued to replace the existing letter of credit; (iv) the date
on which a final drawing under the letter of credit is honored by the Bank; or,
(v) the date which is fifteen days following the trustee's receipt of notice
from the Bank specifying the occurrence of an event of default under the
reimbursement agreement directing the trustee to cause either a mandatory tender
of the Bonds.
The resolution permits the substitution of the letter of credit. The Bonds are
subject to a mandatory tender on the substitution date. The trustee shall not
surrender the existing letter of credit for cancellation until all required
draws have been made and honored.
Bondholders may, at their option, tender their Bonds during the weekly rate
mode, on any business day by providing written notice to the trustee, tender
agent and remarketing agent at least seven days prior to the purchase date.
Bondholders may, at their option, tender their Bonds during the daily rate mode
on any business day with notice delivered to the trustee, tender agent,
and remarketing agent by 11:00 a.m. on the purchase date. (All times refer to
local time in effect in New York, New York).
The Bonds are subject to mandatory tender on the following dates: (i) on each
interest rate mode conversion date; (ii) on any business day not later than the
twentieth day after which the trustee and remarketing agent received notice from
North Texas Tollway Authority of (a) its voluntary termination of the liquidity
agreement or credit facility and (b) its intention not to obtain an alternate
liquidity agreement or credit facility in replacement thereof; (iii) on the
fifth business day prior to the expiration of the liquidity agreement or credit
facility; (iv) on a business day not later than the fifteenth calendar day,
but in no event later than the second business day prior to the termination date
of the liquidity agreement or credit facility, after which the trustee has
received notice from the liquidity or credit provider of a termination event or
event of default under the liquidity agreement or reimbursement agreement, as
applicable, causing the liquidity agreement or credit facility to terminate (v)
on the substitution date of an alternate liquidity agreement or credit facility;
and (vii) on any date on which the Bonds would be subject to redemption upon
not less than fifteen day's prior written notice to bondholders.
WHAT COULD CHANGE THE RATING-UP
Long-Term: The long-term rating on the Bonds could be raised if the long-term
OSO rating on the Bank was upgraded.
Short-Term: Not applicable.
WHAT COULD CHANGE THE RATING-DOWN
Long-Term: The long-term rating on the Bonds could be lowered if the long-term
OSO rating on the Bank was downgraded.
Short-Term: The short-term rating on the Bonds could be lowered if the
short-term OSO rating on the Bank was downgraded.
Trustee: Wells Fargo Bank, N.A.
Underwriter: Morgan Stanley & Co. Incorporated
PRINCIPAL METHODOLOGY USED
The principal methodology used in this rating was Moody's Methodology for Rating
U.S. Public Finance Transactions Based on the Credit Substitution Approach
Information sources used to prepare the credit rating are the following: parties
involved in the ratings and public information.
Moody's Investors Service considers the quality of information available on the
issuer or obligation satisfactory for the purposes of assigning a credit rating.
Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.
Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.
Public Finance Group
Moody's Investors Service
Michael J. Loughlin
Senior Credit Officer
Public Finance Group
Moody's Investors Service
Journalists: (212) 553-0376
Research Clients: (212) 553-1653
MOODY'S ASSIGNS A1/VMIG 1 LETTER OF CREDIT-BACKED RATING TO THE NORTH TEXAS TOLLWAY AUTHORITY SYSTEM FIRST TIER VARIABLE RATE REVENUE REFUNDING BONDS, SERIES 2011A.
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